Part 11 Trading Master Class With Experts

What Are Options?

An option is a financial derivative contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset (such as stocks, indices, or commodities) at a predetermined price (called the strike price) before or on a specific date (called the expiry date).

Unlike futures, which obligate both parties to transact, options provide flexibility. The buyer of the option pays a premium to the seller (writer) for this right.